Insurance Blog

Auto insurance Snowden effect

A couple of years ago, it must have seemed like a drive in the country when Progressive launched its Snapshot program, which claimed consumers could save as much as 30 percent on their auto insurance rates if they just gave the insurer an electronic peek at their driving habits.

What a difference a few data breaches make. It seems the growing public concern surrounding electronic surveillance, most recently fueled by former National Security Administration contractor Edward Snowden's startling revelation that spies will be spies, has many drivers looking askance at Progressive's onboard driving monitor, Snapshot.

Snapshot snap judgments?

Last week, Progressive CEO Glenn Renwick admitted to investors that Snapshot's marketing push has hit some rough road with consumers. By the company's estimate, roughly 30 percent of drivers were comfortably onboard with Snapshot, 30 percent wanted more information and 40 percent flat-out refused to embrace the gadget.

"Intellectually, I kind of go, 'Why wouldn't 100 percent of people take this option?'" Renwick said. Nevertheless, he admitted that Snapshot marketing, while "very acceptable, but short of a breakout," has become a "bigger burden" to the company than expected.

Up until a few years ago when usage-based insurance (UBI), aka "pay as you drive" plans, arrived in the consumer market, auto insurance was underwritten based on hard data: your age, the make, model and year of your vehicle, your ZIP code, credit ratings and claims history. The insurance company would compare your profile to that of its other drivers and charge you a premium based on the pool's collective accident risk. Both you and your insurance company save by spreading the risk in this way.

While the prospect of cutting your auto insurance premium by a third appeals to most of us, it appears many are cautious about how much information we share, especially data that could potentially be used against us down the road, so to speak.

Snapshot advertising gets a tweak

Although Progressive tried to calm consumer heebie-jeebies by, for instance, leaving GPS off its Snapshot device, its effort to sell Big Brother as a slightly less-obnoxious little brother fell short of company expectations. Its new pitch to consumers now focuses less on "trust our gadget" and more on "Look at all the rogue drivers ('rate suckers') who are making driving more expensive for the rest of us."

One interested party who no doubt took note of Progressive's heart-to-heart with shareholders was Warren Buffett, whose Berkshire Hathaway owns Progressive's arch rival, Geico. The gecko has yet to introduce a UBI product. While Buffett told his shareholders in May that he was monitoring Progressive's Snapshot "with interest," he admitted that, in his view, there are other ways to attract customers.

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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.

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37 Comments

Lisa

August 14, 2013 at 10:30 am

We kept our snapshots for two months. It wasn't about "Big Brother" as much as the habits it created in order to avoid the dreaded beeps. Our savings were not that great even though two of three cars rarely set the thing off. As a family, we decided it was more of a motivator to go through a yellow light or stop sign rather than make a quick stop...or stop really close to the person in front of us in order to make the stop as slow as possible.

Mr Freedom

August 14, 2013 at 10:27 am

NO F'ING WAY....

Bchbum

August 14, 2013 at 10:17 am

We have used progressive insurance for years for our cars, motorcycle and a commercial policy. I have always been pleased with the service. I signed up for snapshot and actually saved the full 30% which amounted to 100.00 on our 6 month policy. And as for them collecting data on my car I don't mind since my husband and I try to be safe drivers.

Kevin Thomas

August 14, 2013 at 9:48 am

I am delighted with Progressive and am happy to have Snapshot Monitor my driving.

Joey D

August 14, 2013 at 9:02 am

More BIG BROTHER that's out of control,and the modern day "sheep" fall for it,just like the traffic light cameras here.It's all about money.Not for me!I've used common sense for 35 years.I'll die in my 94 Blazer!

Thomas Lynch

August 14, 2013 at 8:54 am

When I leave my house to get pn the main street, which has a 45mph speed limit,and uphill, I must accelerate to 45mph or get run over. As soon as I get to 45mph the road goes downhill about one city block which has a stop sign. Almost every time the snapshot device goes beep beep beep. I am sure snapshot has not taken these factors into consideration. I am sure I will not get a discount. Also there is the little old ladies who start from a stop sign then stop for no apparent reason. Don't get me started on the young girls who speed past me then cut in front of me then slow down like they saw a cop.

Jim

August 14, 2013 at 7:46 am

We have big brother in all of our companies pick ups. To me it is not much of a pain since I am a cautious driver anyway. That being said ,it has caught fellas driving way to fast and out of normal business hours. It may be a good thing for tracking speeding ,braking, ect. but with more of the general public speeding by its a pain.

Marvin Maizel

August 14, 2013 at 7:31 am

I cannot say enough good things about snapshot. It rewards you for good defensive driving habits. That equates to no claims in an area that is full of bad drivers. It proves that the insurance companies do not have to punish good drivers that are surrounded by bad ones and can therefore lower your premiums with no risk.
Perfect for new drivers that have to learn good defensive driving habits...but we all do as well.
A very simple invention that does the trick. Whoever invented the concept deserves the Nobel Driving Peace Award.

Dave

August 14, 2013 at 6:55 am

I tried snapshot for about three weeks...that's it! I monitored what it was recording online and found that unless I was driving in the country on a Sunday, there was no way I was going to get a discount. Sure, I'm not a timid driver, but you can't be when you're commuting in the Boston area!

Feather Braker

August 14, 2013 at 4:05 am

I'm doing the Snap-Shot thing now. A hard brake is to stop quicker than 7mph/sec. With the photo ticketing stop lights by me with the very short yellow lights you have to stop quick.

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